The proposed acquisition of U.S. semiconductor companies by the global private equity fund Canyon Bridge has faced delays due to U.S. government scrutiny. Recently, Ray Bingham, a partner at Canyon Bridge's U.S. affiliate, stated that the current "anti-China" sentiment in U.S. policy is hindering the smooth progress of the acquisition.
The acquisition of semiconductor companies, in general, seems to be encountering significant obstacles. Bingham emphasized that the purchase of Lattice Semiconductor by Canyon Bridge is purely for commercial purposes and that they have taken steps to address the national security concerns raised by CFIUS. Despite nine months of efforts and two unsuccessful applications to CFIUS, the $1.3 billion deal remains unapproved. Political factors appear to be the main cause of the delay.
Since the election, everything related to China has been closely examined and given heightened attention, Bingham told The Wall Street Journal. He added that the political climate is the sole reason for the transaction’s difficulties. “There is no other issue involved.â€
CFIUS, the U.S. inter-agency committee responsible for reviewing investments that may pose national security risks, has become more vigilant, especially regarding deals involving China. Comprising representatives from the Treasury, Defense, State, Justice, and Commerce departments, CFIUS has increased its scrutiny of such transactions. A Treasury spokesperson noted that protecting national security remains CFIUS’s top priority.
Canyon Bridge is now on its third attempt to secure CFIUS approval. The previous two applications were denied during their respective review periods, each lasting roughly two and a half months. Darin Billerbeck, CEO of Lattice Semiconductor, mentioned that both parties have committed to enhancing intellectual property protection to prevent any unauthorized transfer of technology to China. Initially, the CFIUS review team indicated optimism based on the information provided, stating that there should not be any problems.
The "anti-China" sentiment has affected numerous Chinese companies' overseas acquisitions. Since last year, the U.S. has intensified its review of Chinese semiconductor purchases. In December, former President Barack Obama blocked a Chinese investment fund from acquiring Germany’s Aixtron SE, a semiconductor equipment supplier. Earlier this year, an advisory report highlighted the potential economic and military risks of China's $150 billion investment in its semiconductor industry over the past decade, urging policies to maintain U.S. dominance in this sector.
In December, a bipartisan group of 22 House members led by Republican Robert Pittenger urged CFIUS to investigate Canyon Bridge’s deal with Lattice, expressing concerns about possible transfers of critical military technology to China and questioning Canyon Bridge’s ties to the Chinese government.
Ben Chow, managing partner at Canyon Bridge, confirmed that they have fully disclosed the sources of their funding to CFIUS from the start. He reiterated that they have been transparent throughout. Furthermore, Lattice sold its military design division back in 2012, and today it focuses solely on consumer electronics chips, which lack features necessary for military applications.
Billerbeck remains hopeful about Trump's openness to the deal, noting that even if CFIUS objects, Trump could technically approve the transaction. “I know President Trump is a highly intelligent businessman,†Billerbeck remarked. “The Canyon Bridge fund is focused on investing and fostering innovation. I believe he would recognize the value of this deal if explained clearly.â€
This ongoing situation underscores the challenges faced by Chinese companies in acquiring U.S. semiconductor firms amidst shifting geopolitical dynamics.
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